How much does umbrella insurance cost?

Typically $150-$300 per year for $1 million in coverage. It's one of the most affordable ways to protect your assets.

Who needs umbrella insurance?

Anyone with assets to protect. If you own a home, have savings, or could be sued for more than your current policy limits, umbrella insurance is worth considering.

What does umbrella insurance cover?

Bodily injury, property damage, personal liability (like defamation), and some things not covered by underlying policies.

Does umbrella insurance cover my business?

No. Personal umbrella policies cover personal liability only. Business activities need separate coverage.

What's the difference between umbrella and excess liability?

Umbrella insurance is broader—it can cover claims excluded by underlying policies. Excess liability only extends existing coverage limits.

Do I need minimum coverage on my other policies?

Yes. Umbrella policies require minimum liability limits on your auto and homeowners policies.

Umbrella Insurance Basics - Local Insurance Connection

Q: What is umbrella insurance?

Umbrella insurance provides extra liability coverage above your auto and homeowners policy limits. It kicks in when those limits are exhausted.

Q: How much umbrella coverage do I need?

A common recommendation is enough to cover your net worth plus future earnings. Most people start with $1-2 million.

What Is Umbrella Insurance?

Umbrella insurance is extra liability protection that sits above your auto, homeowners, or renters insurance. When those policies reach their limits, umbrella coverage kicks in to protect you from large claims or lawsuits.

Think of it as a safety net for your financial future.

Why Umbrella Insurance Matters

Lawsuits can exceed your standard policy limits faster than you'd expect:

A serious car accident with injuries
Someone drowning in your pool
Your dog biting a neighbor
A defamation claim from a social media post

Your auto or homeowners policy might cover $300,000-$500,000. A lawsuit could easily exceed that. Without umbrella coverage, you're personally responsible for the difference—your savings, your home, your future earnings.

What Umbrella Insurance Covers

Extended Liability Protection

When your auto or homeowners liability limits are exhausted, umbrella coverage pays the rest, up to your policy limit.

Broader Coverage

Umbrella policies often cover claims not included in underlying policies:

Personal injury: Libel, slander, defamation, false arrest
Worldwide incidents: Coverage extends beyond the US
Rental properties: Liability for properties you own
Volunteer activities: Board memberships, coaching

Legal Defense Costs

Umbrella policies typically cover attorney fees and court costs, even for frivolous lawsuits.

What's NOT Covered

Your own injuries or property
Business activities
Intentional or criminal acts
Contractual liability
Workers' compensation claims

How Much Umbrella Coverage Do I Need?

A common formula:

Net Worth + Future Earnings = Minimum Coverage

Most policies come in $1 million increments. Consider:

$1 million: Good starting point for most households
$2-3 million: If you have significant assets or high earning potential
$5+ million: If you have substantial wealth to protect

The cost is surprisingly affordable—often $150-$300/year for the first million.

Requirements for Umbrella Insurance

Insurers require minimum liability limits on your underlying policies:

Auto: Typically $250,000/$500,000 bodily injury, $100,000 property damage
Homeowners: Typically $300,000 liability

These thresholds ensure your other policies handle smaller claims first.

Common Umbrella Insurance Misconceptions

Misconception 1: "I don't have enough assets to worry about" Lawsuits can target future earnings, not just current assets.

Misconception 2: "My regular insurance is enough" A serious injury lawsuit can easily exceed $500,000. Medical costs alone can be catastrophic.

Misconception 3: "Umbrella insurance is expensive" It's actually one of the most cost-effective coverages available.

Misconception 4: "I'm not at risk" Accidents happen to everyone. The question isn't if you'll ever be sued—it's whether you're protected if you are.

Next Steps

Umbrella insurance is one of the most affordable ways to protect what you've built. When you're ready to learn more about your options, we're here to help—no pressure.

Umbrella Insurance Basics